Hay supplies are tight and prices are high this winter. Dale Leslein, manager of the weekly hay auction at Dyersville in northeast Iowa, one of the largest hay auctions in the Midwest, believes supply and prices will remain strong. "We'll find out a little more on January 12 when the annual Hay Stocks report is released by USDA," he says.
That report is based on surveys conducted in early December. "All across the country we are expecting to see in this report significant decreases in the supply of hay compared to a year ago," says Leslein.
The hay auction at Dyersville takes place every Wednesday. Asked about dairy quality hay, Leslein reports there's not much available. "We're down to a thimbleful," he says. "There are relatively few loads here and there of the supreme quality dairy hay left in the country. We're hearing of private treaty sales of $400 a ton or better on that type of hay."
Even more demand for hay could come later on this winter
A lot of hay from Iowa and the Midwest has been shipped to Texas, which suffered extreme drought in 2011. Texas has received some rain recently. While they are a long ways from achieving substantial relief from the drought, ranchers in Texas now have hope that more rain will come in 2012. "If you have hope and good cattle prices, that should stop further liquidation in the cattle herd in the Texas and Oklahoma region," says Leslein. "That could put even put more demand on the hay supply later on this winter."
A total of 609 tons of hay moved through the weekly auction at Dyersville the Wednesday before Christmas. That is a light supply for the Dyersville auction at this time of year. "It's about 50% of normal," says Leslein.
Where is hay coming from that's being sold at the Dyersville auction this winter? "We got quite a bit out of Canada the week before Christmas," he says. "We get some from Nebraska and Wisconsin, but a lot of the hay we're selling this winter is coming from Iowa."
Demand for straw for livestock bedding also strong this winter
In early December, some small square bales were sold for a very high price from the Dyersville auction and hauled to Texas. "The small square bales are selling in the $4 per bale range right now," says Leslein. "But small squares are only about one percent of the total volume of hay that goes through our auction. Predominantly we deal in semi-load lots of big square bales or large rounds. We aren't seeing the volume of small squares anymore. They are very scarce to begin with; it's a labor issue. Most farmers in this region who make any volume of hay have switched over to large squares or large rounds."
What about straw? Is that market strong this winter? "The straw market has done very well this past week," he says. "We were up as high as $63 for big square bales. Demand is very good, and with this freezing and thawing weather we've had so far this winter, it's taking a little more bedding to keep livestock dry. If the ground was frozen hard, it would take less bedding. So far this winter, usage and demand for bedding has been very strong."
Expect to see tight supplies of hay in January 12 USDA report
Usually USDA's annual Hay Stocks report, based on surveys taken around December 1, is released in December. This year it is being released January 12. "I think we'll see some pretty dramatic decreases in supplies of hay indicated in that survey," says Leslein. "The Texas-Oklahoma region had virtually no hay production in 2011 due to drought. A significant amount of hay has been shipped from the western U.S. into the Texas-Oklahoma area. Hay from Iowa, Wisconsin and Illinois has also been hauled into that drought area."
If he were a dairyman or livestock feeder who needs to buy some hay to get through winter, would he buy it now? "I would try to take advantage of this market right now," he says. "We're kind of in a weather market. It's preventing the middle-quality hay from going up in price because usage is down due to the smaller cattle herd. But this year, I wouldn't want to be buying hay at the end of March or in April. I think hay at that time is going to be very scarce and in very short supply."
What does he project for hay prices? "It's all going to depend on the quality of hay you are buying and where the weather goes from this point forward," says Leslein. "I wouldn't be surprised if very little hay sells for less than $200 a ton this winter." For the weekly hay auction market report go online and visit www.dyersvillesales.com.